youngstown business incubator nourishes a vibrant tech sector

“Give me a really great idea and a laptop, and we can start a software company.”

Jim Cossler, Chief Evangelist of the Youngstown Business Incubator (YBI), is giving a whistle-stop tour of his renovated office space. Nicknamed the “Tech Block,” it houses 400-plus employees in four commercial buildings in downtown Youngstown.

Cossler is answering a question he’s asked frequently. A direct, whip-smart man who’s spent a decade building a tech sector in Youngstown – a job many thought impossible – he instinctively fields the question before one even has a chance to ask it.

Why Youngstown?

“When we announced in 2001 that we were going to launch global software companies from Youngstown, the kindest thing people said is, ‘You’re joking, right?’” Cossler quips. “They often told us, ‘You can’t do that in Youngstown. You have to be in Silicon Valley.’”

Cossler knew different. Not only is software ubiquitous – almost every major company needs some form of it – but the location of a software company is “absolutely irrelevant.”

Within the past 10 years, 32 software companies have chosen not only to launch companies in Youngstown, but also to stay and grow them here. YBI has landed the headquarters of Turning Technologies, a 240 employee company, as well as the research offices of San Francisco-based Revere Data.

Youngstown’s burgeoning tech scene has been written up in Inc., and the city was rated among the top 10 startup-friendly cities in the U.S. by Entrepreneur.

YBI has achieved success by focusing on a niche within the technology sector, offering critical services, building a network and never graduating companies.

“We don’t consider ourselves to be an incubator” despite the name, says Cossler. “We feel we’ve built such a powerful network that we can open any door for our companies. We’re creating high-paying, high-value jobs in the Mahoning Valley.”

Finding a Niche

When Cossler rebooted the Youngstown Business Incubator in July 2001 – the month that the newly-approved Ohio Third Frontier directed grantees to focus on tech companies with high-growth potential – it was practically a blank slate.

“We didn’t have any indigenous technology companies located here,” he says. “We weren’t Palo Alto, California – we weren’t even Cleveland, Columbus or Cincinnati.”

Starting with nothing seemed to give YBI the freedom to innovate, however. Cossler’s first task was to figure out how to create a successful industry cluster.

“We knew that we couldn’t be good at everything,” he says. “Instead of being mediocre at everything, we decided to be world-class at one thing and make sure we do it right.”

The logical focus was software companies, he reasoned, because you don’t go to their storefronts when you need to buy something. They could be anywhere. Moreover, software is proprietary, and that would bring needed revenue.   

“If there’s a proprietary router in Youngstown, then someone in Portland has to send their dollars to Youngstown. When cities and states can be net importers of dollars, that’s economic development. Everything else is social engineering.”

YBI accepts software companies into its free incubator space after a rigorous vetting. Would-be founders apply to Cossler, who meets with YBI’s Chief Science Officer to discuss whether it will work. The next step is an “ugly baby session” – 12-15 people in YBI’s external network listen to a presentation and critique it.

Once a company is accepted into the incubator, it typically takes 2-3 years to turn a profit. They don’t start paying rent until they're viable. “One of the reasons we decided on software is because they’re very fast to start and succeed,” says Cossler. “You can know within six months if they’re likely to make it.”

Currently, the YBI’s five-story building for early stage companies is 65 percent occupied.

Never Graduate Anyone

The typical model for business incubators is to accelerate and graduate startups. Once they sprout leaves, you fling them off to take root in your backyard.

Cossler rejects that model. “It’s the dumbest thing to scatter them and tell them to work alone. ‘Congratulations!’ You’ve really just sentenced them to death.”

Instead of graduating companies, YBI relocates them to other real estate on its campus. Companies stay because the rent is affordable (downtown lease rates are a mere $8-10 per square foot, less than rates in Pittsburgh or Cleveland and a fraction of the cost of Silicon Valley) and they can dip into a good talent pool.

Perhaps most importantly, software companies on YBI’s campus have access to what Cossler dubs “The Managed Cluster.” Software employees can walk down the hall and seek advice from someone else in the industry -- and it’s all free.

Beyond this, Cossler also boasts about a 5,000 person external network that he’s cultivated. Software company executives – including many that are part of the far-reaching “Youngstown Diaspora” – often want to mentor local startups.

“The former head of Cisco is from Youngstown and his parents still live here,” says Cossler. “He told me, ‘I don’t want to bury my parents in a dying town.’ We’ve had natives who are living in Tokyo, Mountain View, London and Tel Aviv contact us.”

Cossler and his staff manage the network by using a premium LinkedIn account to reach out to successful software executives who hail from the Mahoning Valley.

Of course, one might argue that Youngstown startups are in a unique situation because there isn’t an off-campus tech cluster, whereas other cities have diverse sectors. Still, Cossler maintains that YBI’s approach could work anywhere.

Linda Knopp, Director of Policy Analysis and Research at the National Business Incubation Association in Athens, Ohio, says that YBI's model is quite unusual.

"Youngstown has a unique model, because they give companies room to grow in their facility, yet still have space for new companies," she says. "It isn't common to provide that level of services to graduates, and they've had great success there."

If YBI’s resources are not enough to convince startups to stay, there’s also a kind of built-in loyalty. “Someday, I’ll hold you personally responsible,” says Cossler.

Recruiting Talent

Two and a half years ago, San Francisco-based Revere Data opened an office in Youngstown and relocated 10 research jobs from India to Youngstown. Today, there are 35 employees working here, and there are plans to add more soon.

Research Director Dan McCafferty, who hails from “Pittsburgh via the world” and has worked for the Army and International Paper, says that he has no difficulty recruiting smart, motivated employees to work for Revere in Youngstown.

“It’s not an issue of finding talent or bringing it in. It’s here in abundance.”

That wasn’t the preconception of top Revere executives when an employee who grew up in Youngstown prodded them to give it a second look. Yet they quickly realized that they could re-shore jobs to the U.S. by locating in Youngstown.

“From a technological standpoint, with all of the improvements over the last 20 years, it really doesn’t matter where you’re located,” says McCafferty. “But it does matter that there’s a skilled workforce the company can draw from.”

One of the advantages to doing business in Youngstown is access to young talent. There are 75-100 major colleges and universities within 50-100 miles of the city.

Turning Technologies CEO Mike Broderick says his recruiting costs are nil. "The untold story is the highly qualified, underemployed folks around here, working in service industry because they couldn’t find job in their chosen career. Couple that with the fact that there are people working outside the area from Northeast Ohio who want to come back, and we've been able to attract the best and brightest."

Turning the Corner

“Eight years ago, you could have shot a cannon off down this street and not hit anyone.”

Cossler is standing on West Federal Street outside of the YBI’s offices. Glancing down the street, signs of renewal are evident in Youngstown’s urban core, which is lined with ornate, neoclassical buildings that have dodged the wrecking ball.

Sidled up next to businesses like Blue Magic Tattoos and Piercings and Silver’s Vogue Shop are newbies like the Lemon Grove and V2 Wine Bar. Street traffic is modest, but there are groups of office workers walking towards the restaurants.

Although Cossler touts Youngstown’s suburbs and its proximity to Cleveland and Pittsburgh when he talks to recruits, he admits that downtown has made a modest comeback. The presence of 400 tech workers making $60,000 a year hasn’t hurt.

“They may live in Aurora, but they’re going to spend a lot of money downtown,” he says. Some of the professionals in YBI’s offices also live in renovated downtown apartments. 

Cossler has nearly finished renovations of the YBI’s fourth building, which will house a $69 million research laboratory for the software-driven additive manufacturing industry. The federal grant was announced last week at a press event by Congressman Tim Ryan, Sherrod Brown and White House officials.

For Cossler, the most gratifying moments come from seeing local companies succeed. One of the YBI’s rising stars is via680, a startup that has developed interactive video email to improve how people communicate using email.

via680 was launched by former Turning Technologies executives who left to start their own company. Cossler was thrilled to see it. “To me, that signifies success."